Wells Fargo shares new details on CEO search in earnings call
Wells Fargo provided new details about its CEO search on Friday without disclosing whether it will follow Warren Buffett’s advice to avoid Wall Street candidates.
In a conference call to discuss its first-quarter earnings, interim CEO Allen Parker said the troubled bank has hired an executive search firm to find a replacement for Tim Sloan, who resigned under regulatory pressure last month. It expects the new chief in place by next year.
“For 2020, what we’re telling you is, we’re going to have a different CEO,” Parker told investors.
But when asked whether Wells is searching for someone with actual banking experience — echoing Buffett’s suggestion that they look outside of Wall Street — Parker threw up his hands, saying he didn’t know.
“Although I’m available to the board for any necessary consultation, or any other way they need me in connection with this process, I’m not involved in the search process. So unfortunately, I don’t have any insight into the criteria that they’re applying to their work or the timetable they’re thinking about in terms of completing that work,” Parker said.
Buffett, Wells Fargo’s largest shareholder with a 10% stake, has advised the troubled financial giant not to hire a CEO from another big bank given the company’s ongoing troubles with Capitol Hill lawmakers.
“They just have to come from someplace [outside Wells] and they shouldn’t come from Wall Street,” Buffett said in an interview with the Financial Times. “They probably shouldn’t come from JPMorgan or Goldman Sachs.”
Parker was named interim CEO after Sloan abruptly stepped down in March after less than three years at the helm. The resignation followed growing pressure from Washington over numerous consumer scandals, starting with revelations that it had opened millions of fake accounts and credit cards in customers’ names to boost quotas.
Sloan took over from John Stumpf following the fake account scandal only to face accusations that the company forced customers to buy insurance they didn’t need, pushed higher mortgage rates on some customers, and encouraged an aggressive sales culture that hurt clients.
Parker on Friday said that the bank will no longer provide guidance on when the company can expect a cap on its size to be lifted. The Federal Reserve restricted the bank’s growth in February 2018 as a punishment for its shoddy corporate governance.
Sloan had previously said the cap would likely be lifted in 2020.
Wells reported quarter profits of $5.86 billion, up from $5.14 billion a year ago on lower expenses. It reported revenue of $21.61 billion, down from $21.93 billion a year ago.
The bank estimates that its net interest income — how much it makes on the difference between loans and deposits — could fall as much as 5% this year.
The guidance sent the company’s shares down 2.6%, to $46.49.
In New York, JPMorgan Chase wowed Wall Street by reporting a 5% increase in profit during the first quarter of 2019, to $9.18 billion on revenue of $29.12 billion.
The bank said a decline in trading revenue, which fell 17% in the first three months of the year to $5.47 billion, was offset by a 19% gain in revenue from the consumer banking division to $3.96 billion.
In a call with reporters to discuss the results, CEO Jamie Dimon hemmed and hawed over his own succession plans, saying the only reason he didn’t raise his hand at a recent Congressional hearing when asked if his successor might be a woman or person of color is because he didn’t understand the question.
“Well, folks, first of all, we don’t talk about succession publicly, which is why I think a lot of people were a little confused by the question,” he said of the April 10 question by Al Green (R-Tex.).
Dimon, who’s been the top executive of the bank since late 2005, made the comment after being asked by a Post reporter whether his response at the hearing meant that the bank’s CFO, Marianne Lake — who was on the call with him — would not be the next CEO, prompting nervous laughter from the executives on the call.
“It is very possible and it’s honestly likely over a longer period of time,” he said. “And it has nothing to do with Marianne. I think Marianne is exceptional.”
JPMorgan’s shares rose Friday 4.6 percent to $111.21 a share.